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U.S. President Barack Obama and Republican House Speaker John Boehner discussed the fiscal cliff Wednesday in a telephone call. It followed several days of political sparring over steps to prevent a year-end series of tax increases and spending cuts.

The call raises the possibility that negotiations will soon resume between the White House and congressional leaders.

Obama is demanding that Republicans agree to raise tax rates at upper incomes as part of a deal to rein in future deficits. GOP leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates.

A spokesman for Boehner disclosed the call.

Earlier Wednesday, Obama warned congressional Republicans not to inject the threat of a government default into the complex negotiations.

"It's not a game I will play," declared Obama as Republicans struggled to find their footing in talks with a recently re-elected president and unified congressional Democrats.

Among the Republicans, Senator Tom Coburn of Oklahoma became the latest to break ranks and say he could support Obama's demand for an increase in tax rates at upper incomes as part of a comprehensive plan to cut federal deficits.

Across the Capitol, House Majority Leader Eric Cantor said Republicans want to "sit down with the president. We want to talk specifics." He noted that the GOP had made a compromise offer earlier in the week and the White House had rejected it.

Eventually, Democrats acknowledge, there will be compromise talks toward an agreement that raises revenues and reins in Medicare and other government benefit programs, and perhaps raises the government's $16.4 trillion US borrowing limit.

So far, the GOP has offered to support non-specified increases to raise tax revenues by $800 billion over a decade but has rejected Obama's demand to let the top income tax rate rise from 35 percent to 39.6 per cent.

Economy still struggling

The "fiscal cliff," with its year-end deadline, refers to increases that would affect every worker who pays federal income tax, as well as spending cuts that would begin to bite defense and domestic programs alike.

Economists in and out of government say the combination carries the risk of a new recession, at a time the economy is still struggling to recover fully from the worst slowdown in decades.

Obama delivered his latest warning at a meeting of the Business Roundtable a few blocks from the White House.

He said he was aware of reports that Republicans may be willing to agree to higher tax rates on the wealthy, then seek to extract spending cuts from the White House in exchange for raising the government's borrowing limit.

"That is a bad strategy for America, it's a bad strategy for your businesses and it's not a game that I will play," Obama said, recalling the "catastrophe that happened in August of 2011."

That was a reference to a partisan standoff that led the Treasury to the brink of the nation's first-ever default and prompted Standard & Poor's to reduce the rating for government bonds.

Avoiding that crisis led directly to the current standoff, since part of the compromise then was to set in motion the spending cuts that Obama and Congress are now trying to avoid.

Coburn, a conservative rebel within the GOP ranks, made it clear months ago he was ready to support higher tax revenue as part of an overall deal to restrain government spending programs.

In an interview on MSNBC, he went one step further.

Some Republicans open to raising top tax rates

"I don't really care which way we do it," he said. "Actually, I would rather see the rates go up than do it the other way because it gives us greater chance to reform the tax code and broaden the base in the future."

Democratic Senator Chuck Schumer taunted members of the House GOP leadership. They are "like generals, hunkered away in a bunker, who don't realize that their army in the field has already laid down its arms," he said.

A handful of other Republicans in both houses have said in recent days they could support raising the top tax rates.

In the House, conservatives say they suspect House Speaker John Boehner let it be known he wouldn't mind the discussion, even though he made a case in a closed-door meeting of the rank and file last week that raising rates would be worse for the economy than raising revenue by closing tax loopholes.

House Republicans opened the week by proposing a deficit reduction plan that includes raising $800 billion in higher revenue and curtailing cost-of-living increases for Social Security and other government benefit programs as part of a plan to cut deficits by $2.2 trillion over a decade.

In addition, they recommended raising the age of eligibility for Medicare beginning in a decade, a step that generates no savings in the next 10 years but makes longer-term changes that would strengthen the program's financial foundation.

The White House ridiculed that plan as "magic beans and fairy dust," saying taxes must rise on families earning $250,000 or more to generate enough revenue to deal with the nation's fiscal crisis.

Obama dispatched Treasury Secretary Tim Geithner to the Capitol last week with a proposal that would raise taxes by $1.6 trillion over a decade, make relatively small spending cuts and include new funding to stimulate the economy as well as renew expiring unemployment benefits, help hard-pressed homeowners and protect doctors who treat Medicare patients from a looming cut in reimbursement rates.

He also sought authority to raise the debt ceiling subject only to a congressional vote to override his decision. Under current law, Congress must approve any increase before it takes effect.